When preparing 2017 tax returns, many small businesses will consider whether they can take advantage of immediate deductibility for assets costing less than $20,000.

As part of this decision, companies need to think about how this opportunity interacts with the ability to claim costs as part of an R&D Tax Incentive claim.

In summary, you can’t receive immediate deductibility for an asset and also receive the R&D tax offset for decline in value. As a result, companies with a turnover of under $10 million need to consider whether they are better off immediately deducting the cost of the asset, or obtaining the R&D tax offset for the time for which the asset is used in R&D activities.

This decision should be made on a case by case basis, and in consideration of obligations under the tax law that can restrict your choice.

In some cases, accessing the immediate deductibility for an asset rather than the R&D benefit could increase a company’s tax losses and consequently increase the refundable component of any R&D tax offset relating to other eligible R&D expenditure. In other cases, if the extent of R&D use is high and the asset life short, the R&D tax incentive benefits may be more valuable.

Contact our highly specialised R&D Tax team to discuss your specific circumstances and the benefits of different approaches for your business needs.